CFTC Chief Won't Participate in MF Global Review: Report

By IBT Staff Reporter On 11/05/11 AT 12:35 AM

Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, testifies at a House Financial Services Committee hearing on financial regulatory reform on Capitol Hill in Washington on June 16. Photo: REUTERS

The head of the U.S. futures regulator working on a sweeping review into the business practices of failed futures brokerage MF Global Inc. said he will not be participating in any further parts of the inquiry, a source told Reuters Friday.

Gary Gensler, chairman of the Commodity Futures Trading Commission, and Jon Corzine, who recently resigned as MF Global's CEO, worked at Goldman Sachs Group Inc. at the same time and held prominent positions. They both left the investment bank in the late 1990s.

"I don't know if there is an official recusal, but he's said he's not going to participate in the MFG inquiry. He's done with it," said a source who has participated in meetings on MF Global.

Gensler has not participated in meetings during the last few days, and has chosen to not participate in the review because he doesn't want to create an appearance of a conflict of interest, the source said.

U.S. regulators have launched an investigation into MF Global as they search for more than $600 million in missing customer money. The FBI also has shown a preliminary interest in regulatory probes looking into the missing funds.

MF Global filed for bankruptcy protection last Monday after risky trades on European debt triggered its collapse.

The decision by Gensler comes as U.S. Sen. Charles Grassley, R-Iowa, on Friday called on the CFTC chief to recuse himself from matters related to MF Global.

"MF Global's case is a big collapse that requires a lot of work from the commission to try to figure out what went wrong and minimize further investor losses if possible," Grassley said in a statement.

"It's hard to see how the commission chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm," he said.